Metered Access

Crain's Detroit Business is a metered site. Print and digital subscribers have unlimited access to stories, but registered users are limited to eight stories every 30 days. After viewing three metered stories, you'll be asked to register or log in. After eight more stories in 30 days, you'll be asked to subscribe.

A ‘Quicken Loan' for Chrysler: Did it lead the company to the Dime Building?

Note: This item has been updated with a separate blog posting. Please see the follow-up here in which Quicken sources deny there was any leverage in the deal.

There are a few things that most of the people involved in Detroit real estate want to talk about these days, and the deal for Chrysler Group LLC to take a downtown foothold is one of them.

It's to be a very small lease, roughly 20,000 square feet, but it's got everyone talking.

But there's an even deeper rumor about how this deal got set up. The rumor involves Dan Gilbert, Chrysler CEO Sergio Marchionne and loan deal involving the Chrysler world headquarters.

As the story goes, you need to go back to 2010 and a very quiet deal involving Chrysler's massive 4.4 million-square-foot headquarter building.

Crain's broke the story (here) that a group of local and New York investors pooled their money to buy Citigroup's $225 million loan against the Chrysler building. At the time, Citigroup didn't care for the risk associated with a loan collateralized by Chrysler's headquarters and it was a group of investors who bought the loan for a fraction of the cost.

When I wrote this story I mentioned that local real estate investor David Friedman was the ringleader and got the local money together. At the time, I was told that his lifelong friend, Gilbert, was involved as well, though I had mixed information from sources and decided to play it on the safe side and leave his name out.

Since writing the story, however, other people with knowledge of the deal have told me that Gilbert was one of the investors. It seems like the kind of deal in his wheelhouse anyway; taking a big risk on a local company for a huge upside.

Fast forward to December.

Crain's also broke the story (here) that Chrysler wants a Detroit office presence to be in line with its popular "Imported From Detroit" ads, as well as to have the recruiting tool of a Detroit office.

I'm told that the official announcement on Chrysler's 20,000-square-foot lease in the Dime Building will be coming in the next couple weeks. Gilbert, if you don't know, owns the Dime Building as part of his growing real estate portfolio.

But something that has been swirling in the downtown real estate circles is that Chrysler really didn't want the Dime Building, and had other buildings in mind. One Detroit Center is one that's been named, as well as 1001 Woodward.

In the midst of the negotiations, apparently, it was Gilbert who reached out to Marchionne and personally sealed the deal.

Unfortunately, this is the kind of deal that nobody wants to talk about on-the-record. Gilbert's people didn't want to comment about any of this.

But many have been wondering if there is some kind of pressure Gilbert was able to apply to Chrysler though his co-ownership of the loan against their building.

A stretch? Maybe.

I've bounced this off a few people who know loan deals pretty well, and they can't imagine how he could be using that situation to his advantage. Still, all the facts seem to line up. And if anyone knows how to work a loan into leverage, it's the guy who built a massive loan company.

Another idea about the whole deal is that Marchionne was responsive to Gilbert because of his ever-growing clout in Detroit.

"I think it's a case where Marchionne is saying 'OK, I'll be spending a lot more time in Detroit and I don't know a lot of the folks, and a guy like Gilbert knows everyone, so I should be doing deals with a guy like him,'" said one person I talked to, who knows the inner workings of the Dime Building deal.

When the deal gets announced, I'm told that everyone will be shocked with the design Chrysler is bringing to the Dime Building.

"They're doing everything short of turn the building into a car," one person told me.

Even if the whole loan connection is true, it's doubtful anyone will admit it.